Ethiopia - Poverty and wealth

Photo by: imageoptimist

Under the rule of Haile Selassie, Ethiopian society was characterized by
gross inequality between the largely aristocratic
elite—consisting of landowners, lords, nobles, the royal family,
government officials, and elements of the clergy—and the
impoverished peasantry. Indeed, according to Kebbede, the massive
famines of the 1960s could have been avoided if the obligations on the
part of the peasantry towards the elite (in terms of providing
agricultural produce) had not been so oppressive. The Derg regime
subsequently abolished feudal obligations and titles of privilege, even
going to the extreme of executing numerous members of the high-ranking
nobility (the socalled "red terror"). Despite the
egalitarian rhetoric of the Derg, however, high-ranking government
officials

GDP per Capita (US$)

Country

1975

1980

1985

1990

1998

Ethiopia

N/A

N/A

91

100

110

United States

19,364

21,529

23,200

25,363

29,683

Dem. Rep. of Congo

392

313

293

247

127

Eritrea

N/A

N/A

N/A

N/A

175

SOURCE:
United Nations.
Human Development Report 2000; Trends in human development and
per capita income.

retained privileged economic positions. Today, Ethiopia's elite
continues to consist of government officials, in addition to a small
upper class of highly skilled managers and professionals.

Like all the countries of Sub-Saharan Africa, poverty is rampant in
Ethiopia. The UNDP's Human Development Index (HDI) listings,
which arranges countries according to their overall level of human
development, ranks Ethiopia 171st out of a total of 174 nations. The HDI
is a composite index (one that assesses more than one variable) that
measures life expectance at birth, adult literacy rate, school
enrollment ratio, and the
GDP per capita
. It is indicative of a country's general social and economic
well-being. As such, Ethiopia's HDI ranking demonstrates that the
country is one of the poorest and least developed in the world.
Fortunately, the situation has shown small signs of improvement, and the
Ethiopian HDI score increased from a dismal 0.265 in 1985 to a slightly
better 0.309 in 1998 (the highest possible rank is 1.0, and
Canada—the highest ranking HDI country— scored 0.935 in
1998).

The Ethiopian government spends relatively little on education and
health. In 1998, for example, public expenditure on health and education
as percentages of the GDP equaled 1.6 percent and 4.0 percent
respectively. Though these expenditures displayed marginal increases,

Distribution of Income or Consumption by Percentage Share:
Ethiopia

Lowest 10%

3.0

Lowest 20%

7.1

Second 20%

10.9

Third 20%

14.5

Fourth 20%

19.8

Highest 20%

47.7

Highest 10%

33.7

Survey year: 1995

Note: This information refers to expenditure shares by percentiles
of the population and is ranked by per capita expenditure.

SOURCE:
2000 World Development Indicators
[CD-ROM].

they are nowhere near the percentage level of industrialized countries,
such as the United States, which spent 5.4 percent of the GDP on
education and 6.5 percent on health in 1998. Moreover, the Ethiopian
government spends a significant amount on military expenditure, largely
as a result of the border war with Eritrea, though such expenses have
decreased substantially from 10.4 percent of the GDP in 1990 to 3.8
percent in 1998. The fact that the Ethiopian government must continually
service a large debt does not help the social expenditure cause.

The vast majority of Ethiopians spend their meager incomes on the basic
necessities of life, such as food, rents, clothing, fuel, and
transportation. Very little is spent on entertainment and recreation,
which are considered luxuries for those that live in considerable
poverty. To make matters worse, in the past 10 years, the increase in
the GNP per capita has been grossly outweighed by mounting inflation,
which means that Ethiopians are having an increasingly difficult time
purchasing the commodities essential for human existence. The UNDP
estimates that the annual growth rate in GNP per capita between 1990 to
1998 was 1.0 percent, while the average annual rate of inflation during
the same period was 9.7 percent.